Shopping: The Pleasure/Pain Principle

Recent studies conducted by researchers at Stanford University and Carnegie Mellon might go a long way in explaining our spending habits or in the case of the current economic downturn, our penny-pinching ways. Apparently, during every purchase we make there is an emotional tug of war taking place in two distinct parts of our brain that determines if we’re going to spend money or not. The study involved imaging shoppers’ brains while they contemplated these decisions. Jonah Lehrer, editor at large for Seed Magazine and author of “How We Decide,” explains:

They discovered that when subjects were first exposed to the item, a part of the brain called the nucleus accumbens (NAcc) was turned on. The NAcc is a crucial part of our dopamine reward pathway – it’s typically associated with things like sex, drugs and rock ‘n’ roll – and the intensity of its activation was a reflection of desire for the item. If the person already owned the complete Harry Potter collection, then the NAcc didn’t get too excited about the prospect of buying another copy. However, if he’d been craving a George Foreman grill, then the NAcc flooded the brain with dopamine whenever that item appeared.

But then came the price tag. When the subjects were exposed to the cost of the product, the insula was activated. The insula is associated with aversive feelings, and is triggered by things like nicotine withdrawal and pictures of people in pain. In general, we try to avoid anything that makes our insula excited. Apparently, this includes spending money.

The experiments found that depending on which of these centers won out in test subjects, it predicted with great frequency whether or not a purchase was ultimately made. Though retailers might not had the hard science to back up their methods, they have certainly developed a number of tricks to help successfully sway the outcome.  Call it a system of trial and error – practiced on every customer that walked through their doors over the years – that has taught them to subtly manipulate consumer habits, increasing the likelihood that people will spend. Lehrer uses the example of bargain warehouse stores like Costco:

The goal of these discount warehouses is to constantly prime the pleasure centers of the brain, to keep us lusting after things we don’t need. Even though we probably won’t buy the Rolex, just looking at the fancy watch makes us more likely to buy something else, since the coveted item activates the NAcc.

But it’s not enough to just excite our reward centers: Retailers must also inhibit the insula. This brain area is responsible for making sure we don’t spend excessively, and when it’s repeatedly assured by retail stores that low prices are “guaranteed,” it stops worrying so much about the price tag. In fact, researchers have found that even when a store puts a promotional sticker next to the price tag – something like “Bargain Buy!” or “Hot Deal!” – but doesn’t actually reduce the price, sales of the item will still dramatically increase.

However, given the emotional turmoil the general public is feeling in the face of the recession, these same tactics are no longer effective. The scales appear to be so dramatically tipped in favor of not buying that nothing that businesses do is working to snap people out of their current malaise. And this doesn’t bode well for the future health of our economy. In light of this, Lehrer notes that we can’t simply throw more money at the problem – rebate checks? – because we’re living in times that have hard-wired us against our lavish lifestyles of the recent past.  Instead he claims, we need to address the collective psychological condition of the country as a whole.

Lehrer leaves us with one possible proposal brought to the table by economists at Boston University and UCLA calling for a nationwide 10 percent off sale to be subsidized by the federal government. Though we’re not feeling too ecstatic at the potential offered by this plan in particular, we’d be curious to hear your thoughts on alternatives.

Dallas News: Jonah Lehrer: In your brain, a tug of war with every purchase

[via Noah Brier]